The strong demand of the flagship Galaxy S21 smartphones and other models propelled the South Korean technology giant Samsung Electronics to report its bets quarterly profits for the latest completed quarter since 2018.
The company also reported a 46.3 per cent growth in the net profits for the quarter compared to the same quarter a year ago at 7.1tn won ($6.4bn).
With people still forced to mostly stay at home because of the Covid019 pandemic even during the first quarter, the company also experienced strong demand and sale for its television and other home appliances.
However disappointing performance at the semiconductor business of the company caused a dent in the profits of the company for the quarter.
“Solid sales of smartphones and consumer electronics outweighed lower earnings from semiconductors and displays,” the company said in an earnings report.
Apple, the main competitor for the company in the premium smartphone segment also reported better than expected quarter results earlier this week with the company doubling its quarterly profits compared to the beginning of the pandemic quarter because of a surge in the sale of iPhone in the Chinese market.
However both the companies have performed well during the pandemic with many consumers deciding to upgrade their phones, laptops and other devices for allowing for better usefulness while working from home.
Samsung has however forecast a slightly lacklustre second quarter but strong results in the second half of the year with the global economy expectedly recovering from the Covid-19 pandemic and consequently more consumers seeking to upgrade to 5G mobile services.
On the other hand, the costs of increasing production capacity domestically to meet the growing demand for chips hit the performance of this business segment of Samsung despite high demand due to a global shortage. Chip business was also hit by a stoppage of work at its Texas factory in February because of a severe winter storm.
Now however the factory is functioning at full capacity and stronger results for its semiconductor business in the second quarter is expected by the largest chipmaker of the world.
However but that forecast can be offset by a decline in flagship smartphone sales and continuation of supply issues with some components, the electronics giant warned.
The company reported this result a a day after the family of Samsung’s late chairman Lee Kun-hee announced plans to pay more than 12trn won ($10.78bn) in inheritance taxes on his estate. Analysts and markets have been closely watching the tax issue as it could have an impact on the Lee family’s stake in Samsung. However, the announcement provided little clarity about whether or not the Lee family would sell any shares to pay the tax.
(Adapted from LiveMint.com)